MIDAS SHARE TIPS UPDATE: Iofina extracts iodine from oil field brine

Oklahoma is one of the largest oil and gas states in America, producing nearly 500,000 barrels of crude oil per day and vast amounts of natural gas.

The sector employs 15 percent of Oklahoma’s workforce and contributes $60 billion (£48 billion) to economic growth annually.

Production is in good order and generates not only fossil fuels, but also enormous quantities of brine from oil fields.

Traditionally this was seen as wastewater. Iofina, listed on the AIM list considers it an asset.

The company has developed a way to extract iodine from the brine, turning dirty water into a valuable resource. Iodine has numerous uses.

An essential mineral that promotes brain growth and health. It is added to salt and other foods all over the world. Iodine is also used to make images clearer in magnetic resonance imaging (MRI) scans and is a crucial component of products from pesticides to preservatives.

Iofina sells both pure iodine and related compounds used by manufacturers and industrial companies in the US and internationally.

Midas recommended the shares last September, when they were worth 23.5 cents and boss Tom Becker was about to start work on his sixth iodine plant in Oklahoma.

That site is now active and a seventh is expected to be operational next year.

Assessing which locations will yield the most iodine and developing partnerships with oil and gas companies in those places takes time and effort. But Becker and his team are experienced and well connected. They know where to look for deals and plan to continue doing so.

The recent hard work is paying off. The shares have risen 23 per cent to 29p in the past 12 months and Becker announced upbeat interim results last week, with pre-tax profits rising 80 per cent to $4.7m (£3.8m) despite rising costs.

Annual production is expected to reach almost 600 tonnes, with Becker optimistic of reaching 1,000 tonnes per year by 2027 at the latest.

Iofina’s composite arm is firing on all cylinders, increasing revenue and working with customers in industries as diverse as animal nutrition and lithium batteries.

Brokers expect strong, continued growth across the group, suggesting the share price should reach 40 cents as production increases and new deals come to fruition

Midas judgment: Iofina shares have performed well, but should continue to rise as Becker executes his strategy. Iodine is in high demand and Iofina’s technology is cleaner and cheaper than that of many competitors. With a price of 29 cents, the shares remain attractive.